Basket

AAA

DEFINITION of 'Basket'

A single unit of at least 15 stocks that are used in program trading. Baskets are traded on both the NYSE and the CBOE for institutions and index arbitrageurs. Both instruments allow for the composite purchase of all of the stocks in the S&P 500 in a single trade. Baskets were created after the stock market crash in 1987 to better facilitate institutional trading on the index.

INVESTOPEDIA EXPLAINS 'Basket'

Basket was also the nickname given to a specific type of financial instrument that briefly traded on the Philadelphia Stock Exchange in 1989. This security was removed from trading due to regulatory controversy over its nature. The baskets that traded on the other two exchanges eventually also ceased trading due to poor volume.

RELATED TERMS
  1. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  2. Derivative

    A security whose price is dependent upon or derived from one ...
  3. Security

    A financial instrument that represents: an ownership position ...
  4. Chicago Board Options Exchange ...

    Founded in 1973, the CBOE is an exchange that focuses on options ...
  5. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  6. Bulldog Market

    A nickname for the foreign bond market of the United Kingdom. ...
Related Articles
  1. How do I use a
    Options & Futures

    How do I use a "basket" option?

  2. How To Buy Oil Options
    Options & Futures

    How To Buy Oil Options

  3. Spotting A Market Bottom
    Bonds & Fixed Income

    Spotting A Market Bottom

  4. Which Canadian Oil Stocks Are The Best?
    Stock Analysis

    Which Canadian Oil Stocks Are The Best?

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center